sellbydate

One good way to judge ‘value for money’ is to find a similar flat to rent and then compare the monthly rent with an ‘interest only’ mortgage payment. This one sounds similar at £750pcm. http://www.lettingweb.com/properties/view/...&perpage=15 I reckon the ‘interest only’ mortgage on £195k would be ~£1000 per month, 30% more, so it is still overpriced. (Remember that if you have a deposit, although your monthly mortgage payments will be less, you’re forfeiting the interest that that money would be earning in the bank so don’t forget to account for that) I do think rents will creep up a bit as prices crash over the next couple of years. In this example, I would think £150,000/£850pcm might be about the tipping point where it becomes worth buying again.

Have a look at the Nationwide website. If you go to House price index, data downloads, then try Regional quarterly index (post ’73). 3 areas are quite interesting to compare on the same graph; Scotland, London and Northern Ireland Both Scotland and Northern Ireland do appear to have missed most of the boom and the subsequent falls from the early 90s but it shows N. Ireland certainly hasn’t missed the latest boom!

I’m not sure this is a new phenomenon though. London has always been more expensive and therefore its always been possible for people to sell a 2 bed place down there and buy a 5 bed place up here, irrespective of what house prices are in absolute terms. With regards to the Heritors sell off, I do wonder whether its actually the other way round and investors pulling their money out of the fund is forcing Heritors to sell up in order to pay them their money back. Either way though, it indicates lack of confidence in property as an investment.

When you're down there, have a look out for houses for sale with the ‘Heritors’ name on the sign (usually with Rettie and/or DJ Alexander on them as well). A quick google search suggest that Heritors is (amongsts other things) a property investment fund run partly by DJ Alexander. Until a few months ago I hadn’t seen a single sign, now you can’t move in the New Town without seeing them. Someone in the EA business calling the top of the market as well perhaps?? Edinburgh not so different to rest of the UK after all?!

I reckon the time to buy will be when the cost of renting and buying are comparable again i.e. rental cost equal or more than ‘interest only’ part of a mortgage on similar properties. Still some way to go…

I’m not so sure we can expect the best of both worlds, much as I would like to! Now that the sentiment of ‘I must buy soon at all costs in case I miss the boat completely’ seems to have evaporated from most buyers I believe there will be an increase in demand for rental properties and a corresponding increase in the rents that they are able to achieve. However, although some people try to make a connection that therefore this must mean BTL is still a great idea, imo, because house prices have become so detached from rental yields, I think we have a long way to go before the balance tips back again. I was browsing a book called ‘The Buy to Let Bible’ in Waterstones the other day and interestingly it suggested that you should look for a 12% gross yield when purchasing and ignore the capital appreciation. Basically dividing the purchase price by 100 to get the required monthly rent. Currently up here in Edinburgh, for a decent 2 bed flat in a good area you're looking at around £300k to purchase and a similar one might rent out for £1000 pcm. The above rule would suggest that either the price has to come down to £100,000 (even on a really bearish day I think that’s unlikely!), rents rise to £3k pcm, or they’ll meet somewhere around the £175k /£1750pcm level. I’m expecting drops in house prices of about 30-40% depending how much they overshoot on the down side.

My home ‘owning’ work colleagues enjoy telling me that the reason property prices will continue to rise forever is that we’re reverting to system found in Europe where the majority of people rent for their whole lives and property is owned by a rich elite class. (They love the bit about them becoming the rich elite and me being 'left behind' as a renter!) Is this actually the situation? With euro interest rates lower than the UK at present, rents would surely have to be significantly lower than the equivalent mortgage payments for the majority of people to be happy doing this. Or are house prices so astronomical that even with low interest rates they're still out of most peoples reach. If this were the case, surely this would mean very low yields for landlords? Is there some legislation/tax rules that have encouraged this arrangement over there and yet previously prevented it happening in the UK? Have things changed in the last 5 years? (apologies if this has been covered previously)

You’re right, that is 4.5% gross. See link http://uk.mcgi.yahoo.com/brand/s=bestbuy$easyaccess You'd pay tax on that interest, but your income from a rental property would also be taxed I presume, so I decided comparing the gross figures was comparing like for like..

Hello, first post here after much lurking! Its not all 'bad' news for us bears. scanning through a few property sites I came across a couple of examples suggesting things are not so great for the BTL clan. The returns on some new-build places are now less than you could achieve at the bank for both 1 and 2 beds. 2 bed - 8/9 East Pilton Farm Rigg, Granton To buy = £183000 http://www.nethouseprices.com/index.php?co...mit=0&curPage=1 To rent = £650pcm http://www.lettingweb.com/search/htmpg_pro...A_Areas=245.htm Return = 3.6% 1 bed Granton (with sea views but still a building site!) To buy = £157000 http://www.espc.com/EspcPublic/UniversalPa...aspx?rid=210514 To rent = £550 http://www.lettingweb.com/search/htmpg_pro...A_Areas=245.htm Return = 3.55% (return estimated from rent minus 10% letting agent fees, 5% on maintenance and insurance. Void periods not included!) Considering you can get 4.5% in a bank account, there’s not much to recommend BTL up here at the moment and with first time buyers struggling to buy too, I can't see much holding up the prices